The empowered group of ministers (EGoM) headed by finance minister P Chidambaram on Monday approved charging for excess spectrum beyond 4.4 MHz that is held by incumbent telecom service providers, but only prospectively from October 2012.

The Telecom Commission, the highest
decision-making body in the sector, had earlier said service providers should be charged retrospectively from the date of spectrum allotment.

Under the old regime, telecom licences were awarded along with a start up spectrum of 4.4 Mhz. However, beyond 4.4 Mhz, incumbent operators were awarded spectrum without having to pay a one-time fee.

The EGoM decision means that the incumbent telecom service providers will not be required to pay any one-time fee for the spectrum that they have used till October.

If the Cabinet accepts the EGoM decision, the government would be able to collect only about R27,000 crore — instead of about R50,000 crore that it could have collected if it had gone ahead with the Telecom Commission’s decision.

Out of the Rs. 27,000 crore, some Rs. 12,000 crore is against the names of Bharat Sanchar Nigam Ltd (BSNL) and Mahanagar Telephone Nigam Ltd (MTNL).

It is highly unlikely that the two loss-making PSUs will be able to pay the spectrum fee.

Interestingly, even the attorney general, who gave his opinion on Friday, had said the companies should be charged from July 2008 for excess spectrum held beyond 6.2 Mhz.

The EGoM decision, however, will not have any impact on the tariffs as there are about seven to eight service providers in an area and the excess spectrum is held by only three to four of them.

“There is no reason for the government to waive off such a huge amount of one-time fee for spectrum. The revenue collected should have been used for public good such as education and health services,” said B. K. Syngal, former CMD of Videsh Sanchar Nigam Ltd (VSNL).

The government has been making efforts in containing high fiscal deficit.

In January this year, the Telecom commission approved charging for excess spectrum.